State Council, Guiding the Direction of Foreign Investment Provisions

Promulgated: February 11 2002
Effective: April 1 2002
Applicability: Investment projects invested by overseas Chinese or investors from Hong Kong, Macao and Taiwan shall make reference to the Provisions (Article 16).

Main contents: As compared to the Guiding the Direction of Foreign Investment Tentative Provisions, the 2002 Provisions no longer make distinction between Restricted A and B projects of the Foreign Investment Industrial Guidance Catalogue. Now restricted projects whose total amount of investment is below the restriction limit may be approved at the provincial level, with the project then filed for the record with the superior authorities (Article 12). The Provisions also note that the Catalogue may limit foreign-funded projects to "equity and cooperative joint ventures only", requiring that the "Chinese parties shall hold a controlling interest" or that "Chinese parties shall hold a relative controlling interest" (Article 8). Article 10 stipulates that permitted projects that export all of their products directly shall now be deemed encouraged projects. Restricted projects that export at least 70% of their total sales shall be considered permitted projects upon approval by the competent department.
Related legislation: Foreign Investment Industrial Guidance Catalogue (Amended in 2007), Oct 31 2007, CLP 2007 No.10 p22 and Guiding Foreign Investment in the Dominant Industries of the Central and Western Regions Catalogue
Repealed legislation: Guiding the Direction of Foreign Investment Tentative Provisions, Jun 20 1995